ITO WD 18(1)(3), MUMBAI V. SHRINIWAS G. MITTAPALLI, MUMBAI

ITA 5589/MUM/2008

• Counselvise Citation: 558919914 RSA 2008
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 28-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 04-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: PARESH M SHAH
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYAR AGHAVAN, JM I.T.A.NO. 5589/MUM/2008 ASSESSMENT YEARS: 2004-06 THE INCOME-TAX OFFICER, WARD 18(1)(3), MUMBAI. VS. SHRI SHRINIWAS G. MITTAPALLI, R.NO. 69, WORLI BDD CHAWL NO. 85, ACHARYA DHONDI BABA NARAYAN MARG, MUMBAI 400 018 PAN: AIWPM 7694 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D. SONGATE RESPONDENT BY : SHRI PARESH M. SHAH O R D E R PER P.M. JAGTAP, AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, MUMBAI, DATED 30.6.2008, WHEREBY HE CANCELLED THE PENALTY OF RS.3,56,000/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271-D OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE, IN THE PRESENT CASE, IS AN INDIVID UAL, WHO FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 25.10.200 4 DECLARING TOTAL INCOME OF RS.52,600/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS ACCEPTED LO ANS FROM FOUR PARTIES IN CASH AGGREGATING TO RS. 3,56,000/- IN THE PREVIOUS YEA R ELEVANT TO THE ASSESSMENT YEAR 2004-05. SINCE THE SAID LOANS WERE ACCEPTED BY THE ASSESSEE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS, THE ASSESSING OFF ICER ISSUED A NOTICE REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S.269SS SHOULD NOT BE IMPOSED FOR ACCEPTING THE SAID LOANS IN CASH IN CONTRAVENTION O F THE PROVISIONS OF SECTION 269SS. IN REPLY, IT WAS SUBMITTED ON BEHALF OF THE ASSESSE E, INTER ALIA, THAT THE RELEVANT LOANS WERE TAKEN IN INSTALMENTS FROM THE CONCERNED FOUR PARTIES AND AT NO POINT OF TIME THE AMOUNT TAKEN AS LOAN EXCEEDED RS.20,000/-. IT WAS CONTENDED THAT THERE ITA NO.5589/MUM/2008 SHRI SHRINIWAS G. MITTAPALLI 2 WAS THUS NO CONTRAVENTION OF THE PROVISIONS OF SEC TION 269SS AND THE PENAL PROVISIONS OF SECTION 271D WERE NOT ATTRACTED. THIS CONTENTION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AS, A CCORDING TO HIM, THE PROVISIONS OF SECTION 269-SS WERE VERY CLEAR IN THIS REGARD AND T HE MOMENT THE AGGREGATE OF LOANS TAKEN BY THE ASSESSEE FROM A PARTICULAR PERS ON IN A PARTICULAR YEAR EXCEEDED RS. 20,000/-, THE SAID PROVISIONS WERE ATTRACTED. THE ASSESSING OFFICER ALSO DID NOT FIND MERIT IN THE OTHER SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE HIM DURING THE COURSE OF PENALTY PROCEEDINGS AND PROCEE DED TO IMPOSE PENALTY OF RS. 3,56,000/- U/S.271D BEING A SUM EQUAL TO THE AMOUNT OF LOAN TAKEN BY THE ASSESSEE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269-S S. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S .271-D WAS CHALLENGED BY THE ASSESSEE IN APPEAL FILED BEFORE THE LEARNED CIT (A) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE H IM, THE LEARNED CIT(A) CANCELLED THE SAID PENALTY IMPOSED BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARA 6 OF HIS IMPUGNED ORDER: I HAVE CAREFULLY CONSIDERED THE ISSUE IN DISPUTE. IT IS CLEAR THAT IN SIMILAR SITUATION THE HONBLE RAJASTHAN HIGH COURT HAS DECIDED THE MATTER IN THE FAVOUR OF THE APPELLANT AS CLEAR FROM THE CONTENTS OF CASE LAW REPORTED IN 2690 ITR 590 (CIT V. MANOJ LAL WANI), THE HONBLE HIGH COURT HAS HELD THAT WHEN LOANS TAKEN I N CASH ARE DEPOSITED IMMEDIATELY AFTER IN THE BANK, IT INDICAT ES THAT THE AMOUNT OF LOAN, IN FACT, WAS RECEIVED BY THE APPELLANT. TH E COURT THEREFORE OBSERVED THAT IN SUCH SITUATION THERE WAS NO INTENT ION TO VIOLATE THE PROVISIONS OF SECTION 269SS IN THIS CASE. IN THE C ASE OF THIS APPELLANT ALSO THE A.R HAS SHOWN THAT ALL THE DEPOSITS WITHOU T ANY EXCEPTION HAVE BEEN DEPOSITED IN THE BANK ACCOUNT WITHIN A WE EKS TIME AS CLEAR FROM THE DETAILS GIVEN IN THE CHART AS ABOVE. THIS ESTABLISHES THAT THE AMOUNT WAS INDEED RECEIVED BY THE APPELLANT AND IT IS NOT A CASE OF INTERPOLATION OF CASH ENTRIES. 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) CAN CELING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271D, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE DETAILS OF THE IMP UGNED LOANS TAKEN BY THE ITA NO.5589/MUM/2008 SHRI SHRINIWAS G. MITTAPALLI 3 ASSESSEE IN CASH ARE GIVEN ON PAGE 3 OF THE IMPUGNE D ORDER OF THE LEARNED CIT(A) WHICH CLEARLY SHOW THAT THE SAID LOANS WERE RECEIVE D BY THE ASSESSEE IN INSTALMENTS AND THE AMOUNT OF LOAN INVOLVED IN EACH TRANSACTION DID NOT EXCEED RS. 20,000/-. THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE BEF ORE THE AUTHORITIES BELOW AS WELL AS BEFORE US IS THAT THIS FACTUAL POSITION THAT NO NE OF THE LOAN TRANSACTIONS TAKEN IN CASH EXCEEDED RS. 20,000/- GAVE HIM AN IMPRESSION T HAT THERE WAS NO CONTRAVENTION OF THE PROVISIONS OF SECTION 269-SS AND UNDER THIS BONAFIDE BELIEF, THE ASSESSEE ACCEPTED THE SAID LOANS IN CASH. IN SUPPORT OF THIS CONTENTION, RELIANCE HAS BEEN PLACED ON BEHALF OF THE ASSESSEE ON THE CBDT CIRCUL AR NO. 572 ISSUED ON 3 RD AUGUST, 1990. IT IS OBSERVED THAT A SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE JODHPUR BENCH OF I.T.A.T IN THE CASE OF ITO V. SATY APRAKASH GUPTA (85 TTJ (JD.)18, WHEREIN IT WAS HELD THAT IN VIEW OF THE FACT THAT CIRCULAR NO. 572 DATED 3.8.1990, ISSUED BY THE CBDT GAVE AN IMPRESSION THAT SECTION 269-SS WAS NOT ATTRACTED IN RESPECT OF DEPOSIT OR LOAN NOT EXCEEDING RS. 20,00 0/- PENALTY U/S.271D WAS NOT LEVIABLE, MORE SO WHEN EACH LOAN OR DEPOSIT DID N OT EXCEED RS.20,000/-. IN THE CASE OF CIT V. SAINI MEDICAL STORES 9276 ITR 79 (P& H) PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271D WAS CANCELLED BY THE LE ARNED CIT(A) AS WELL AS BY THE TRIBUNAL ON THE GROUND THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED, WHE RE THE AMOUNT INVOLVED IN EACH TRANSACTION DID NOT EXCEED RS.20,000/- AND THE HON BLE PUNJAB & HARYANA HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL OBSERVING TH AT THE TRIBUNAL WAS FULLY JUSTIFIED IN ACCEPTING THE VERSION OF THE ASSESSEE THAT VIOLA TION OF THE PROVISIONS OF SECTION 269-SS WAS UNDER A BONAFIDE BELIEF AND THE SAME WAS NOT WITH ANY INTENTION TO AVOID OR EVADE THE TAX. KEEPING IN VIEW THE DECISIO N OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF ITO V. SATYAPRAKASH GUPTA (SUPRA) AND THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. SAINI MEDICAL STORES (SUPRA) AND HAVING REGARD TO THE RELEVANT FACTS OF THE CASE, WE ARE OF THE VIEW THAT ITA NO.5589/MUM/2008 SHRI SHRINIWAS G. MITTAPALLI 4 THE LOANS IN QUESTION WERE ACCEPTED BY THE ASSESSEE IN CASH UNDER THE BONA FIDE BELIEF THAT THERE WAS NO CONTRAVENTION OF THE PROVI SIONS OF SECTION 269-SS AND THIS BONAFIDE BELIEF CONSTITUTE A REASONABLE CAUSE. IN THAT VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT( A) CANCELING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271D AND DISMISS THIS APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT N THIS 29 TH DAY OF APRIL, 2011. SD. SD. (ASHA VIJAYARAGHAVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED THE 29 TH APRIL, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE ITO WARD 18(1)(3), MUMBAI 3. THE CIT, MC XVIII, MUMBAI. 4. THE CIT(A)-XVIII, MUMBAI 5. THE DR E BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI